Black women are America’s fastest-growing group of entrepreneurs, but funding challenges are hampering growth

Quitting the 9-to-5… to be your own boss. Black Americans are more likely to start businesses than any other group, and women of color start businesses at 4.5X the rate of the overall population (as of 2021, white men comprised the minority of business owners). As the US’s fastest-growing group of entrepreneurs, Black women are increasingly leaving corporate roles to launch their own companies. A few factors boosting this trend:

• Discrimination: Many are worn down by the effects of implicit or explicit bias in corporate America. Nearly half of job seekers say they feel discriminated against during the hiring process, and 55% continue to experience discrimination after getting the job.

• Job losses: Black women were the most affected by pandemic-related job losses. In 2020, the labor-force participation rate of Black women dropped sharply and is expected to keep falling, though it’s still higher than the rate for white women.

• FYI: Diverse companies tend to outperform more homogenous orgs, both in profits and in innovation. For companies, losing Black female employees is a worrying trend.

Mind the gap… While the rate of Black entrepreneurship is high, bias and funding gaps pose roadblocks to growth. As of January 2022, just 4% of Black businesses were still open after 3.5 years, compared to the national average of 55%. Fewer than half of Black businesses were considered healthy before the pandemic, versus 73% for white-owned businesses. Lack of capital is a major factor hampering growth for Black businesses.